{"id":43826,"date":"2026-05-13T19:05:11","date_gmt":"2026-05-13T19:05:11","guid":{"rendered":"https:\/\/www.europesays.com\/canada\/43826\/"},"modified":"2026-05-13T19:05:11","modified_gmt":"2026-05-13T19:05:11","slug":"boc-would-consider-energy-sector-investments-u-s-exchange-rate-in-rate-tightening-scenario","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/canada\/43826\/","title":{"rendered":"BoC would consider energy sector investments, U.S. exchange rate in rate-tightening scenario"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Bank of Canada Governor Tiff Macklem, pictured in Ottawa on May 4, said in April the central bank is closely monitoring the effects of the Iran war when setting monetary policy.Adrian Wyld\/The Canadian Press<\/p>\n

The Bank of Canada\u2019s governing council says it\u2019s weighing a range of different paths for its benchmark interest rate to cope with inflation risks from the Iran war.<\/p>\n

On Wednesday, the central bank released the summary of deliberations<\/a> that led to its decision to hold the policy rate steady for a fourth consecutive time in late April.<\/p>\n

At the time, Bank of Canada Governor Tiff Macklem was candid about the dilemma the Middle East conflict poses for monetary policy-makers.<\/p>\n

If the war in Iran<\/a> or tighter trade restrictions from the United States hamper the economy but inflation remains well contained, further cuts to the policy rate might be in order, he said. On the other hand, spreading cost pressures from the higher global price of oil could instead push the Bank of Canada toward consecutive rate hikes.<\/p>\n

\u201cUncertainty is unusually elevated and there are many possible outcomes. Monetary policy may need to be nimble,\u201d Macklem said in April.<\/p>\n

Wednesday\u2019s summary of deliberations largely repeated the scenarios Macklem laid out at the last rate decision, with a few additional details.<\/p>\n

For instance, governing council indicated the degree of tightening needed in a higher inflation scenario would partly depend on the level of investment in the energy sector, as well as what happens to the Canadian dollar\u2019s exchange rate with its U.S. counterpart.<\/p>\n

Ottawa, Alberta close to reaching industrial carbon pricing deal, sources say<\/a><\/p>\n

The Bank of Canada\u2019s six-member governing council is responsible for setting the benchmark interest rate and other high-level elements of monetary policy.<\/p>\n

Future changes in monetary policy are expected to be small if the economy evolves roughly in line with the central bank\u2019s latest forecast, which is based on the global price of oil declining to US$75 per barrel over the next year.<\/p>\n

But the summary of deliberations notes that, between the war in Iran and the outcome of the upcoming review of the United-States-Mexico-Canada Agreement, known variously as USMCA or CUSMA, there are many paths economic growth and inflation could take from here.<\/p>\n

\u201cThere was a range of views on the probabilities related to the outcome of the CUSMA review and the war in the Middle East, and thus the most likely path forward for the policy interest rate,\u201d the summary of deliberations read.<\/p>\n

Macklem was asked in April what the central bank would do if Canada faced steeper tariffs and a sustained increase in global oil prices at the same time, but he would only offer a general answer.<\/p>\n

\u201cWhat we\u2019re trying to convey is the direction and the rough magnitude of how we would respond given certain situations,\u201d he said.<\/p>\n

\u201cObviously, if it\u2019s a combination, it\u2019s going to be even more complicated. And we\u2019ll have to weigh the various factors.\u201d<\/p>\n

The Bank of Canada\u2019s next interest rate decision is set for June 10.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Bank of Canada Governor Tiff Macklem, pictured in Ottawa on May 4, said…\n","protected":false},"author":2,"featured_media":43827,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[164,224,238,214,212,239,17,211,230,231,227,213,210,235,171,234,143,222,249,215,216,229,225,226,219,240,220,244,245,247,242,246,94,243,217,142,233,113,232,241,223,236,237,228,221,218,248],"class_list":{"0":"post-43826","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-canada","8":"tag-alberta","9":"tag-arts-news","10":"tag-bc","11":"tag-breaking-news","12":"tag-breaking-news-video","13":"tag-british-columbia","14":"tag-canada","15":"tag-canada-news","16":"tag-canada-sports","17":"tag-canada-sports-news","18":"tag-canada-trafficcanada-weather","19":"tag-canadian-breaking-news","20":"tag-canadian-news","21":"tag-economy","22":"tag-education","23":"tag-environment","24":"tag-federal-government","25":"tag-foreign-news","26":"tag-globe-and-mail","27":"tag-globe-and-mail-breaking-news","28":"tag-globe-and-mail-canada-news","29":"tag-government","30":"tag-life-news","31":"tag-lifestyle","32":"tag-local-news","33":"tag-manitoba","34":"tag-national-news","35":"tag-new-brunswick","36":"tag-newfoundland-and-labrador","37":"tag-northwest-territories","38":"tag-nova-scotia","39":"tag-nunavut","40":"tag-ontario","41":"tag-pei","42":"tag-photos","43":"tag-political-news","44":"tag-political-opinion","45":"tag-politics","46":"tag-politics-news","47":"tag-quebec","48":"tag-sports-news","49":"tag-technology","50":"tag-travel","51":"tag-trudeau","52":"tag-us-news","53":"tag-world-news","54":"tag-yukon"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/43826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/comments?post=43826"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/43826\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media\/43827"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media?parent=43826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/categories?post=43826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/tags?post=43826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}